Pension firm under fire for 'needlessly' delaying transfers

Pension firm under fire for 'needlessly' delaying transfers

Dentons Pension Management, a self-invested personal pension (Sipp) provider, is accusing actuarial firm Willis Towers Watson of delaying defined benefit (DB) pension transfers from schemes they administer by being overzealous.

Martin Tilley, director of technical services at Dentons, revealed to FTAdviser that the administrator delays each process by four to six weeks to check if the Sipp provider is registered with HM Revenue & Customs (HMRC).

He said: “We are taking them [DB transfers] in from multiple schemes and multiple administrators, but the most individually numerous is Willis Towers Watson.

“We had 21 in 2016 and 18 in the first nine months of 2017.

“As these come from multiple separate schemes, in order to ‘belt and braces’ every transfer they insist on writing to HMRC for confirmation our scheme is ‘still’ a registered pension scheme.”

Mr Tilley noted that Dentons has been a registered scheme since 1996 and is also on Origo Options, a service which facilitates pension transfers.

The amount of DB transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution schemes in order to access them via the pension freedom rules.

Mr Tilley argued that besides the time delay resulting of Willis Towers Watson practice, clients can also miss out on investment opportunity and return.

He said: “If clients are looking to invest into property for example, completion needs to be delayed and in some cases investments into funds have missed close dates.”

A cash equivalent transfer value (CETV) is given by the pension scheme when a member requests it, and is valid for three months.

Clients, advisers and potentially new providers will normally use this time window to process the transfer.

According to Steve Carlson, chartered financial planner at Cardiff-based Carlson Wealth Management, “there needs to be a balance between trustees doing their due diligence to protect a member from being scammed, and dragging out the process so that people may miss the guarantee date on their CETV”.

Brendan Mooney, head of UK pension administration at Willis Towers Watson, told FTAdviser that the firm maintains a list of HMRC approved schemes, providers and other companies where it doesn’t request confirmation of the registration status.

He said: “We update our white list regularly with the aim of increasing coverage as much as we can.

“We also cross reference our white list with the Origo list of approved providers. Therefore, we would argue that we do make real efforts to reduce the number of HMRC referrals that we make.”

But Mr Mooney said when it is dealing with a case involving a Sipp provider which Willis Towers Watson has limited exposure to, the company “will check HMRC approval and will continue to do so”.

Mr Mooney said: “This is to protect the interests of the member, the trustees and ourselves to avoid the punitive tax charges that would apply to an unauthorised transfer payment.”